nettime's cash hoard on Fri, 26 Oct 2012 12:56:30 +0200 (CEST)

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<nettime> The Monetary Future: How Bitcoin Is Being Destroyed

Friday, October 26, 2012

The Old Radical: How Bitcoin Is Being Destroyed
Posted by Julia Dixon

DGC Magazine
Wednesday, October 24, 2012

This piece was recently sent to me by 'an old radical.' The message is 
perhaps a bit harsh, but I have to admit, all I can do is grimace and 
nod in agreement to this thesis: "Bitcoin and state banking systems are 
born enemies: only one can survive. If you are imagining that they can 
peacefully coexist, you are fooling yourself."


I was a radical before most of you Bitcoin users were born. That doesn't 
make me any better than you (hopefully I did a few things to make you 
better than myself), but it does give me a better perspective; time just 
works that way.

I've been watching the recent developments in the Bitcoin markets, and 
having seen this drama before (too many times), I thought I'd pass along 
a lesson. This will strike its target in some of you, but others of you 
are also likely to reject it, because it doesn't match what you want to 
be true.

Here's the lesson: Trying to go 'legit' will destroy the Bitcoin market.

For those of you who haven't turned away, I'll explain:

There's nothing really wrong with Bitcoin itself. The developers are 
doing a nice job of addressing its problems and a heartening number of 
people have jumped up to create new tools and new services. No problem here.

The problem is that too many people in the Bitcoin market are thinking 
the old way.

Understand this: Bitcoin is a new thing - it is not compatible with
the old financial system.

Bitcoin and state banking systems are born enemies: only one can 
survive. If you are imagining that they can peacefully coexist, you are 
fooling yourself.

Bitcoin exposes the fraud that is state banking. If you think that 
politicians and bankers will calmly allow it to take over a significant 
percentage of world financial flows, you're in denial. States will come 
after Bitcoin, and hard. They have no choice. Their money can only exist 
if there are no competitors.

Alan Greenspan may have done a lot of bad things, but he is not stupid. 
And before his adventures at the Fed, he wrote this:

"(Under a fiat system), there is no way to protect savings from 
confiscation through inflation' If there were, the government would have 
to make its holding illegal, as was done in the case of gold."

What gold was then, Bitcoin is now -- times five.

So, let me try this again: Going legit gives the state a handle to grab 
you with. 'Legit' means registered and regulated, doesn?t it? You have 
to tell them your name, where you live, and where you put your money, 
right' It means that they can control you whenever they want to.

There are two big reasons why Bitcoin people are tempted to go 'legit':

- They want to get mega-rich fast, like Mark Zuckerberg.

- They have been trained to be obedient and can't unlearn it. They are 
compelled to believe that the government is basically good. It must just 
be one bad politician or one bad law.

#2 is what destroyed e-gold, and it looks like #1 is what killed GLBSE. 

Because of GLBSE, Bitcoin is now being regarded as a currency and states 
will start to regulate it as one. That means that they'll attack the 
public exchangers and force everyone possible to comply with their rules.

So' it's time to man-up, or to crumble.

(Interestingly, there is often a larger percentage of women that 
'man-up' than men.)

Will you have the guts to do the right thing when the pressure is on' If 
yes, I applaud and honor you. If not, here are a few cheap excuses to 
use (after all, who wants to admit conditioning or cowardice):

- Without the rule of law, everything would fall apart.

- Without regulation, criminals would destroy everything.

- Yes, regulation is coercive, but along with it comes a certain 
amount of public benefit!

- I got ripped off, and someone has to fix it!

- If I can't sue someone, they can get away with ripping me off!

- We can't get people to use Bitcoin unless it's authorized.

- We need approval or we will forever remain a tiny market.

A significant number of Bitcoin people will say these things (and 
others), but the real truth will be that they are scared, or are still 
hoping to get mega-rich, or just can't rip the 'government is our 
friend' meme out of their heads. But mostly it will be fear.

We all feel fear of course, but some of us are determined enough to do 
the right thing, even when we're afraid.

So, here's a final tip: If you run into someone who can feel the fear 
and still do the right thing, don't let go of them.

Reprinted with permission.

Posted by Jon Matonis at 9:55 AM
Labels: bitcoin, cryptography, digital bearer instrument, enforcement, 
nonpolitical currency

About Me

Jon Matonis
    I am an e-Money researcher and crypto economist focused on 
expanding the circulation of nonpolitical digital currencies. My career 
has included senior influential posts at Sumitomo Bank, VISA, VeriSign, 
and Hushmail.

    "Free-market protagonists, such as Matonis, regard cybercash as 
better than traditional government-issued or -regulated money, because 
it is determined by market forces and thus nonpolitical in nature." 
--Robert Guttmann, Professor of Economics at Hofstra University, in 
Cybercash: The Coming Era of Electronic Money, 2003

    "Matonis is quite correct that the new technology makes easier the 
use of multiple private currencies." --Mark Bernkopf, Federal Reserve 
Bank of New York, in "Electronic Cash and Monetary Policy", 1996

    "Matonis argues that what is about to happen in the world of money 
is nothing less than the birth of a new Knowledge Age industry: the 
development, issuance, and management of private currencies." --Seth 
Godin in Presenting Digital Cash, 1995

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